The Cabinet has agreed to pursue a 'soft-landing' transition from the EU that could see free movement continue in all but name until 2022.

A senior government source told the Daily Mail that Remainers had declared victory in their battle for a lengthy transition period, despite fears it will slow the process of taking back control of Britain's borders.

The source claimed leading Brexiteers such as Liam Fox, Boris Johnson and Michael Gove have now signed up to the idea of a substantial 'implementation phase' after the UK leaves in 2019, in order to give business and government time to adjust to departure from the EU.

Brexiteers Liam Fox and Boris Johnson have been persuaded of the need for a transition period which would allow free movement to continue after Britain leaves the EU, an insider has said

In return, Remainers such as Philip Hammond and Amber Rudd have finally accepted the idea that the UK will ultimately leave both the single market and the customs union.

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The revelation about private Cabinet discussions comes days after Theresa May laid down the law about the need to maintain confidentiality following a string of damaging leaks.

Healthcare and travel insurance bills could rise for holidays in EU

Families could be hit by dramatically increased healthcare bills and travel insurance when going on holidays to Europe after Brexit.

EU negotiators have insisted the UK should not be allowed to retain membership of the European Health Insurance Card (EHIC) scheme.

The aggressive move comes after British officials insisted they wanted to keep the scheme open for travellers.

UK tourists carrying an EHIC card can access free healthcare or claim back the cost of treatment while visiting Europe.

If Brussels successfully kicks Britain out of the scheme – which costs the UK about £155million a year – it could see travellers hit with huge fees if they get sick in the EU.

Experts have also warned that this could lead to a rise in travel insurance costs.

Brexit Secretary David Davis announced earlier this year: 'We're looking to see if we can get a continuation of the EHIC scheme as it now exists.'

Mr Davis said the UK would try to set up a unilateral arrangement if continuing with EHIC became a problem.

Brexit Secretary David Davis has previously indicated that any transition would not last longer than two years. But this line has now been softened, opening the door to a transition that could last until 2022.

Under one option, the length of the transition period would be laid down in law to prevent future backsliding.

'The Cabinet is now united on the need for a transitional period – that wasn't the case five weeks ago,' the Government source said.

'No one is bothered about the free flow of people with the EU continuing during the transition – the Brexiteers are all focused on the end point.

'Nobody has set a time limit on the transition – it could be two years, it could be a bit longer. It needs to be driven by practicalities like getting customs arrangements in place and ensuring the needs of business are met.'

The agreement to pursue a transitional deal is a victory for Mr Hammond who has been championing the case for a phased exit from the EU for the last year.

Dr Fox, the International Trade Secretary, had argued against the idea of a transitional deal, warning it would delay the benefits of Brexit such as striking new trade deals and controlling immigration.

But Dr Fox, who argued reaching a free trade deal with the EU should be easy because we already meet EU regulations, said he would not have a problem with a transitional period.

Mr Gove, a leader of the Brexit campaign, is said to have changed his mind on the issue after being appointed as Environment Secretary, where he is now grappling with the issues involved in disentangling Britain's farming and fishing industries from 40 years of regulation by Brussels.

Meanwhile Remainer Philip Hammond has been convinced that the UK will leave both the single market and the customs union, a Cabinet source said

Brussels has already indicated it is interested in the idea of a transitional deal, which will give both sides longer to negotiate.

Business leaders met with Mrs May in Downing Street yesterday to push the Prime Minister to agree a transitional deal that will give them time to adjust their systems and staffing needs.

Last night Downing Street said Mrs May had told business leaders, who included the heads of Tesco, Unilever and BAE Systems, she wanted to avoid a 'cliff-edge' exit from the EU.

Austria has urged Italy not to allow migrants arriving by boat to its islands to travel on to the mainland. Sebastian Kurz, the Austrian foreign minister, said Central Europe risked becoming overloaded with tens of thousands of migrants flooding in from Libya if the practice continued.

Now Brussels wants UK expats to lose free movement rights

British expats living in countries such as Spain and France would lose the right to move to another EU state after Brexit, under tough Brussels plans.

The EU was last night accused of treating UK citizens with disrespect after it emerged the bloc wants to strip them of their free movement rights.

Brussels officials said the one million British expats in the EU should have to stay in the country they were currently living in.

The demand has astonished UK officials, who accused EU chiefs of hypocrisy.

British negotiators pointed out that the EU had repeatedly said it would negotiate as a bloc that valued freedom of movement.

Britain is willing to give EU nationals who remain in the UK voting rights, but is refusing to bow to EU demands for the European Court of Justice to oversee the deal.

While a number of agreements have been reached on the highly contentious citizens' rights package, British negotiators yesterday said the EU's offer was not 'up to [our] level'.

One UK official said: 'What we're offering EU citizens living in the UK is fair. We expect UK nationals living in the EU to be treated with the same respect.

'The UK has put a serious offer on the table, but there are significant gaps in the EU's offer.'